In a world where technology is changing rapidly with every passing day, it’s important to reflect on how these changes impact the philosophical concept of money. To some, the definition of money is a medium of exchange, unit of account, and store of value. A line of thought criticized by many who argue that emerging technologies, such as Bitcoin, challenge the validity and applicability of this outdated concept. The advent of Bitcoin, among other cryptocurrencies, commands a reevaluation of what money is and how it functions in the modern digital world.
Contrary opinions exist in the European Central Bank (ECB), where a senior official was quoted saying “cryptos have failed to make good on their claim to perform the role of money.” He further belittled the innovation in cryptocurrency, considering it more of a threat than a technological advancement. Such a perspective overlooks the rich diversity among cryptocurrencies and their unique goals. This reveals a fundamental misunderstanding, as these criticisms can also be applied to other markets and industries.
Furthermore, the ECB official insists on seeing the topic through a European lens, assuming European needs and understanding are universal standards. Meanwhile, they are not against the evolution of the definition of money, but against the idea of a free market spearheading this evolution.
Behind these statements lies the interest of central banks in a “unified ledger” to connect tokenized security networks and CBDCs (Central Bank Digital Currencies). They view asset tokenization as a beneficial development that can improve transparency and efficiency in asset distribution. However, they dismiss cryptocurrencies as a flawed system incapable of guiding the future of money. This implies a deeply ingrained belief that changes to something as crucial as money need to be controlled, not organic and user-driven.
The exploration of the future of money also resurfaces unanswered questions about a CBDC’s role. Diskussions are centered on its programmability, how it relates to current payment systems and, importantly, whether the concept of fungible money still holds.
These discussions indicate that even institutions, long resistant to change, are tentatively questioning the essence of money. Consequently, the innovation in cryptocurrency, driven largely by blockchains, may force the hand of tradition and necessitate an evolution in thought. This evolving landscape thus calls for adaptive considerations and reflections on the history of money, its present functions, and its potential flexibility for the future. As we grapple with these questions, only time will tell if cryptocurrencies will continue advancing on this challenging road.
To cap it off, the text ends with a reminder that the direction of change is becoming increasingly independent from semantics and institutional control, neither of which are adequate to dictate the future of money anymore. The crypto space continues to push boundaries, without waiting for legacy finance to realize that old rules may no longer apply in this new era.
Source: Coindesk
